Tuesday, April 25, 2006

Early Amazon: Shopping cart recommendations

I have talked about a couple fun projects ([1][2]) I did at Amazon even though I was supposed to be working on other things. This story is more extreme, a project I was explicitly forbidden to do and did anyway.

I loved the idea of making recommendations based on the items in your Amazon shopping cart. Add a couple things, see what pops up. Add a couple more, see what changes.

The idea of recommending items at checkout is nothing new. Grocery stories put candy and other impulse buys in the checkout lanes. Hardware stores put small tools and gadgets near the register.

But here we had an opportunity to personalize impulse buys. It is as if the rack near the checkout lane peered into your grocery cart and magically rearranged the candy based on what you are buying.

Health food in your cart? Let's bubble that organic dark chocolate bar to the top of the impulse buys. Steaks and soda? Get those snack-sized potato chip bags up there right away.

I hacked up a prototype. On a test site, I modified the Amazon.com shopping cart page to recommend other items you might enjoy adding to your cart. Looked pretty good to me. I started showing it around.

While the reaction was positive, there was some concern. In particular, a marketing senior vice-president was dead set against it. His main objection was that it might distract people away from checking out -- it is true that it is much easier and more common to see customers abandon their cart at the register in online retail -- and he rallied others to his cause.

At this point, I was told I was forbidden to work on this any further. I was told Amazon was not ready to launch this feature. It should have stopped there.

Instead, I prepared the feature for an online test. I believed in shopping cart recommendations. I wanted to measure the sales impact.

I heard the SVP was angry when he discovered I was pushing out a test. But, even for top executives, it was hard to block a test. Measurement is good. The only good argument against testing would be that the negative impact might be so severe that Amazon couldn't afford it, a difficult claim to make. The test rolled out.

The results were clear. Not only did it win, but the feature won by such a wide margin that not having it live was costing Amazon a noticeable chunk of change. With new urgency, shopping cart recommendations launched.

An interesting story, I suppose, but what lessons are to be seen in this?

I do know that, in some organizations, challenging an SVP would be a fatal mistake, right or wrong. When I was at Stanford Business School, I had many occasions to debate those that favored command-and-control style management and learn more about their beliefs.

Those that favor command-and-control, top-down structures seemed to argue that it matters little which hill you charge, as long as you all charge the same hill. Loyalty and obedience, they said, matter more than competence. As they see it, for any organization, chaos is the enemy.

In my experience, innovation can only come from the bottom. Those closest to the problem are in the best position to solve it. I believe any organization that depends on innovation must embrace chaos. Loyalty and obedience are not your tools; you must use measurement and objective debate to separate the good from the bad.

At the time, Amazon was certainly chaotic, but I suspect I was taking a risk by ignoring commands from above. As good as Amazon was, it did not yet have a culture that fully embraced measurement and debate.

I think building this culture is the key to innovation. Creativity must flow from everywhere. Whether you are a summer intern or the CTO, any good idea must be able to seek an objective test, preferably a test that exposes the idea to real customers.

Everyone must be able to experiment, learn, and iterate. Position, obedience, and tradition should hold no power. For innovation to flourish, measurement must rule.

10 comments:

i love the amazon core values. innovation, customer obsession, frugality, etc. -- all the core values interplay to produce highly productive and focused amazonians. i will always remember wilke and bezos chanting the mantra: "nothing is holy, but the customer" during our meetings with them. they valued debate; they valued the "idea". to them, literally nothing was holy, but the customer. everything else, including their own ideas, were up for debate, argument, and at some times, quarrel.

Great story. Companies have to find a means of getting these projects out in an open fashion. The actual ideas are gravy to me, the real benefit is the engagement and productivity it allows in everyone.

Excellent idea. Brainstorming is paramount for success. My only suggestion is that you do the market test before announcing your idea. If you had numbers the first time around, the Fun Police would not have had a leg to stand on. Clearly most of your higher ups could see that they had the opportunity to "steal" an invention from you and run with it. Never look a gift horse in the mouth. Or the gift horse will go to the competition.

That is the best blog about innovation I have read. I am a strong believer that innovation usually comes from the bottom. The key is to allow people to prototype and test their idea. To balance chaos, you need to have an environment that you can test out different idea.

What an excellent story about 'True Innovation' - a challenge to established thinking that delivered real business value.

This is the nature of innovation.

It's a risky game for an individual, but it can have major payoffs. It's when people stick inside their comfort zones and don't raise their ideas, an organization begins to go stale. The SVP in your story is a classic example of someone who stifles creativity out of their own fear.